Oil prices have fundamentally shaped the United States, and the rest of the world, for the last several months. Companies like Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), and plenty more have seen share prices and profits climb while families scramble to find the cash needed to afford the constantly-rising prices. For a while, prices started to fall, but the last three days saw something of a rally. Yet that rally is now under pressure, and some quarters are already looking for the next rally to start.
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Oil futures finished the day on the red side, as WTI crude lost 1.5% to settle at $76.11 per barrel, while Brent crude lost 1.7% to settle at $81.30 per barrel.
Oil’s short-lived rally went on for about three days. At the end of those, two critical points emerged. One, multiple central banks announced interest rate hikes, which increases the potential for a global economic slowdown. Oil seldom sells well when trucks full of goods are sidelined for want of buyers. Two, the previously-shuttered Keystone Pipeline—a major artery of oil in the U.S.—was partially restarted. That restores the flow of product and removes some of the scarcity that fueled the rally.
Yet there are signs of another rally potentially in the making. China’s Zero Covid policies are weakening, which will bring China back into oil consumption markets and potentially help drive prices back up. The possibility of a tighter balance in 2023’s second quarter may also help trigger some price hikes after a winter slowdown.
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